Big business says ACCC’s ‘radical’ merger reforms a risk to the economy

Big business says the ACCC’s push to ‘radically’ reshape the country’s merger rules ‘risks unnecessary economic damage’ and would make Australia a less attractive place to innovate and invest.

ACCC chairwoman Gina Cass-Gottlieb’s case for ‘radical’ merger reform is not justified and risks damaging the economy, the Business Council of Australia argues. Picture: Aaron Francis

Big business says the competition watchdog’s push to “radically” reshape the country’s merger rules “risks unnecessary economic damage” and would make Australia a less attractive place to innovate and invest.

The Australian Competition and Consumer Commission is asking for significantly expanded powers to monitor every merger proposal and to be granted boosted authority to block potential acquisitions without the need to go to the Federal Court.

If dissatisfied, firms would be able to go to the Australian Competition Tribunal, which would reconsider the case in its entirety.

Responding to Treasury’s request for feedback on three options to reform merger rules, the Business Council of Australia said it “does not accept that a case supporting radical change to the existing merger control regime has been established”.

BCA chief executive Bran Black said business sought a “middle ground” that would give the ACCC more visibility over potential corporate tie-ups above a certain size, but not grant it veto power. “Mergers are overwhelmingly not anti-competitive, and this is reflected in the ACCC’s own statistics showing around 93 per cent of mergers considered by the regulator are cleared at pre-assessment,” Mr Black said.

“Australia’s current laws have served the community well, and are well-understood, low-cost, flexible and appropriate given the vast majority of mergers do not raise competition issues.

“Reshaping the merger test and reversing the onus of proof by creating a ‘satisfaction’ standard would put Australia out of step with overseas jurisdictions, including the US and Canada, effectively treat all mergers as presumptively harmful, and reduce Australia’s attractiveness as a place to invest and innovate.

“Australia is in the grip of an investment drought and our economy is under significant pressure, and so the government must carefully weigh any proposed changes to merger laws with the likely impact on business, Australian jobs and our ability to compete.”

Jim Chalmers in August announced a rolling, two-year competition review, advised by a hand-picked panel of experts, chaired by Kerry Schott and including Productivity Commission chair Danielle Wood and former ACCC chair Rod Sims.

Assistant Minister for Competition Andrew Leigh earlier this year released Treasury analysis in support of the review, which showed the lack of a compulsory notice meant at least two-thirds of the 1000-1500 annual mergers fly under the ACCC’s radar.

Dr Leigh showed evidence that acquisitions were concentrated at the big end of town, with the largest 1 per cent of firms accounting for half of all mergers.

Analysis commissioned by the ACCC showed that among the most contested transactions, 60 per cent occur in already highly concentrated markets with three or less remaining competitors, where consumer harm is more likely to occur. But the BCA argued there was “no evidence that the existing merger control regime is contributing to any economic weakness in Australia”.

The business group pointed to Productivity Commission research in September that industry concentration had only increased in “limited areas” since 2006, “and that, in any event, concentration is not necessarily an indicator of weak competition or poor consumer outcomes”.

As corporate Australia squares up for a fight, ACCC chair Gina Cass-Gottlieb in an opening statement to Senate estimates on Wednesday night made her case for sweeping changes to make merger rules “fit for purpose”.

“We consider that the existing voluntary enforcement based regime is not doing its job to identify and prevent anti-competitive mergers,” she said. “Retaining an ineffective merger control regime increases the risk that Australian consumers, business suppliers, including farmers and small business customers, will suffer from less competitive prices, lower quality, less innovation, less choice and lower productivity across the economy.”